DEALTALK-Canada's Telus risks costly snub with Mobilicity bid

TORONTO, April 25 (Reuters) - If Telus Corp hopes to
press its advantage in an upcoming auction of wireless airwaves,
the Canadian telecom may need to abandon its plan to snatch a
floundering rival out of creditor protection and back away from
a nasty fight with the government.

Canada's Conservative government has aggressively opposed
the carrier's expansion plans, which Ottawa sees as a challenge
to its policy of encouraging more competition in an industry
dominated for years by Telus and its two main rivals, BCE Inc
and Rogers Communications Inc.

In effect, Ottawa has warned the entire industry that it
will not tolerate any move that could interfere with its
initiative.

The government has already blocked two previous bids by
Telus to swallow Mobilicity, a low-cost carrier that owns
valuable spectrum assets. The third attempt, a C$350 million
($317 million) bid, was announced late last week by Mobilicity
and its court-appointed monitor.

Ottawa is now waving a big stick at Telus, warning of dire
consequences if the carrier fails to abandon the pursuit,
according to a report in the Globe and Mail newspaper on Friday.
If Telus will not stand down, the government threatened to shut
it out of an upcoming auction of airwaves, the lifeblood of the
wireless industry, by changing the rules of the sale, the paper
said, citing unnamed government sources.

Telus declined to comment on the Globe and Mail report.

But the company and the government, along with Mobilicity
and its debtholders, will have a chance to hash out their
differences next week after the court dealing with the issue
ordered mediation, to be overseen by a veteran retired judge.
Continued...